Avon Parnell Ltd v Chevin - [2020] NZHC 976

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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-1119

[2020] NZHC 976

BETWEEN
AVON PARNELL LIMITED

First Plaintiff

RYAN MATTHEW LEGGATT
Second Plaintiff

AND

PETER LOUIS CHEVIN

First Defendant

CLARK VINCENT VALMONT AND RUSSELL PKR TRUSTEE LIMITED

Second Defendants

Hearing: 12 May 2020

Appearances:

D J Chisholm QC for the Plaintiffs D M O’Neill for the Sixth Defendant

Judgment:

14 May 2020

JUDGMENT OF MUIR J

(Interim Injunction)

This judgment was delivered by me on Wednesday 14 May 2020 at 4.00 pm Pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date:…………………………

Counsel:
D J Chisholm QC, Barrister, Auckland D O’Neill, Barrister, Hamilton

Solicitors:
P Nolan, Solicitor, Auckland
A Fletcher, Evans Bailey, Hamilton

AVON PARNELL LIMITED v CHEVIN [2020] NZHC 976 [14 May 2020]

GRAEME HAYWARD SKEATES
Third Defendant

NORTHERN INVESTORS TRUSTEE LIMITED
Fourth Defendant

VIADUCT HARBOUR NOMINEES LIMITED
Fifth Defendant

BASECORP FINANCE LIMITED
Sixth Defendant

Introduction

[1] The first plaintiff Avon Parnell Limited (APL) seeks an interim injunction restraining the sixth defendant Basecorp Finance Limited (Basecorp), from exercising its powers as a mortgagee in respect of two cross-leased and adjacent properties in Parnell (the Avon Street Properties).

[2] The application raises, albeit at this stage on a “serious question” basis only, the often vexing issue of who among two innocent parties should bear the loss occasioned by fraud.

Background

[3] The facts are not substantially in dispute, at least for the purposes of the present application.

[4] At all times since its incorporation on 29 April 2015, APL’s sole director and shareholder was the second plaintiff Mr Ryan Leggatt, son-in-law of well-known Auckland property investor and money-lender Mr Timothy Edney.

[5] The first defendant, Mr Peter Chevin and Mr Edney have, in the past, had various business dealings. Mr Edney’s interests claim that Mr Chevin is significantly indebted to them. It appears that Mr Chevin assisted in the incorporation of APL, and through that connection obtained the log in and or password details which were necessary to effect online changes to the particulars of APL’s registration with the Companies Office.

[6] Mr Chevin has a chequered commercial history with multiple bankruptcies and several criminal convictions. He is currently disqualified from managing a company.

[7] Although not material to the present application, Mr Chevin claims that as a result of an agreement reached with Mr Edney immediately prior to the events in question, the Avon Street Properties were held by APL on a bare trust for him.

[8] The first-named second defendant, Mr Valmont, is the sole director and shareholder of the second-named second defendant, Russell PKR Trustee Limited (Russell PKR). On 21 and 22 May 2019 and without the knowledge or consent of Mr Leggatt as APL’s sole director and shareholder, Mr Chevin gave notices to the Registrar of Companies (the Registrar) which on their face purported to record:

(a)the removal of Mr Leggatt as the sole…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Avon Parnell Ltd v Chevin

Details

AGLC: Avon Parnell Ltd v Chevin [2020] NZHC 976
Case: [2020] NZHC 976
Decision Date: 14 May 2020

CaseChat Overview and Summary

The case of Avon Parnell Limited v Chevin involved an application for an interim injunction by the first plaintiff, Avon Parnell Limited (APL), against the sixth defendant, Basecorp Finance Limited. APL sought to restrain Basecorp from exercising its powers as a mortgagee in respect of two cross-leased and adjacent properties in Parnell. The application raised the issue of who should bear the loss occasioned by fraud between two innocent parties. The court had to decide whether APL was bound by the loan agreement executed by the second defendant, Mr Valmont, who had been fraudulently appointed as the sole director of APL by the first defendant, Mr Chevin.

The court held that APL had established a serious question as to whether it was bound by the loan document on which Basecorp's mortgage was premised. The court accepted that Section 18 of the Companies Act 1993 was intended to codify the common law position under the line of authorities commencing with Turquand's case. However, the court held that a person who appears as a director of a company as a result of fraud does not similarly bind the company. The court concluded that the notification of the removal of Mr Leggatt and appointment of Mr Valmont was not a function of any action authorised by the board of APL.

The court found that the balance of convenience and the overall interests of justice favoured APL. The court made orders restraining Basecorp from exercising or purporting to exercise any powers as a mortgagee under the mortgage instrument in respect of the properties at 20 and 22 Avon Street, Parnell. The court also provisionally considered a 2B allocation appropriate with a hearing time of 0.2 of a day for costs.

Orders